Section 8 Fair Market Rent (FMR) for ZIP 40291 - 2027

Investment Score for ZIP 40291

Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)

FY 2027 Fair Market Rent Rates

Unit Size	Monthly FMR
Studio	$1,030
1 Bedroom	$1,110
2 Bedrooms	$1,340
3 Bedrooms	$1,710
4 Bedrooms	$1,970
5 Bedrooms	$2,285
6 Bedrooms	$2,559
7 Bedrooms	$2,764
8 Bedrooms	$2,902

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
2BR	$1,340	$245,405	0.55%	F
3BR	$1,710	$309,022	0.55%	F
4BR	$1,970	$393,192	0.5%	F
5BR	$2,285	$512,872	0.45%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 40291 (Louisville, KY) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 40291, as determined by HUD for 2026, is set at $1350 for a two-bedroom unit. This amount represents 19.9% of the median household income in the area, which stands at $81,267. However, the actual rental market in Louisville is significantly higher. According to Zillow, the median price for a two-bedroom unit is $247,283, translating to a price-to-FMR ratio of 15.3 times. This means that the typical rent for a two-bedroom unit would be around $1350 * 15.3 = $20,685 annually, or approximately $1724 per month. Given these figures, there is a significant gap between the FMR and the actual market rents. For Section 8 voucher holders, this implies that they will likely face substantial constraints in finding affordable housing. The FMR is designed to cover the cost of housing that is considered modest but adequate, yet the actual rents far exceed this benchmark. Consequently, voucher holders may struggle to find units that accept their vouchers due to the high costs associated with renting in this ZIP code. #### Affordability & Renter Profile ZIP code 40291 has a population of 41,222, with 23.3% of residents being renters. The occupancy rate is very high at 97.4%, indicating a tight rental market. Given the median household income of $81,267, it is clear that the majority of residents have above-average incomes, making them less reliant on government assistance programs like Section 8. However, the 23.3% of renters still represent a significant portion of the population who may need financial support to afford housing. Despite the relatively high median income, the high price-to-FMR ratio suggests that the market is not particularly affordable for lower-income renters. The median rent for a two-bedroom unit is $1724 per month, which is well above the FMR of $1350. This indicates that the rental market is highly competitive, and landlords can charge premium rates without much difficulty. The tight market conditions mean that there is little room for negotiation, and renters often have to pay more than the FMR to secure a place. #### Investor Angle From an investor’s perspective, the ZIP code 40291 presents both opportunities and challenges. The high occupancy rate and strong demand for rental properties suggest that there is potential for steady cash flow. However, the disparity between the FMR and actual market rents poses a significant hurdle for investors focusing solely on Section 8 vouchers. To determine if this ZIP code is cash-flow positive at FMR, we must consider the typical expenses associated with owning and managing rental properties. Assuming a conservative estimate of 50% of the FMR for operating expenses (including property taxes, insurance, maintenance, and management fees), the net income from a two-bedroom unit would be $1350 - ($1350 * 0.5) = $675 per month. This figure is quite low compared to the actual market rents, which are closer to $1724 per month. Given the high price-to-FMR ratio, the investment grade for this ZIP code is relatively low for Section 8-focused investors. The primary reason is that the FMR does not align with the actual market rents, making it difficult to attract tenants who are willing to pay the higher market rates. Additionally, the limited pool of eligible Section 8 tenants means that the demand for FMR-priced units is also limited. #### Specific Actionable Insights 1. **Focus on Higher-Rent Units**: Investors should consider targeting higher-rent units that are priced closer to the actual market rates rather than strictly adhering to FMR. A two-bedroom unit priced at $1724 per month could provide a more sustainable cash flow than one priced at $1350. 2. **Diversify Tenant Base**: To mitigate the risk associated with relying solely on Section 8 vouchers, investors should diversify their tenant base. This could include offering a mix of market-rate and subsidized units, or targeting other government assistance programs that offer higher payment standards. 3. **Consider Property Enhancements**: Given the high demand and tight market, investors might benefit from enhancing the quality of their rental properties to justify higher rents. Upgrading amenities, improving energy efficiency, and ensuring modern conveniences could help attract tenants willing to pay closer to the market rates. #### Bottom Line For investors focused primarily on Section 8 vouchers, the ZIP code 40291 presents a challenging environment due to the significant gap between FMR and actual market rents. The high price-to-FMR ratio and limited pool of eligible Section 8 tenants make this ZIP code less attractive for such investments. Therefore, the recommendation for Section 8-focused investors is to **skip** this ZIP code unless they are willing to diversify their tenant base beyond just voucher holders. Investors looking for a broader range of tenants might find this ZIP code more suitable, given the strong demand and high occupancy rates.

Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). Demographics from U.S. Census (2024).

About FMR: Fair Market Rent (FMR) is used to determine payment standards for the Section 8 Housing Choice Voucher program, initial renewal rents for some expiring project-based Section 8 contracts, and rent ceilings for HOME Investment Partnerships.